NOTE: I originally wrote and published this article back in November of 2011 and it has generated a lot of interest over the years. I decided to update it this, year to add additional focus for us “one-person shops” who supplement our income or drive our primary income from blogging. I hope the updates help this growing group of solo-preneurs who recognize the value of creating and monetizing content.
It’s that time again! Time to start thinking about budget allocations for next year!
If your or your organization is actively engaging in the social media space, you need to analyze your current budget allocation and either confirm or increase that commitment to social media in your budget planning activities.
Identifying The Tools And Resources
Whether you work for a Fortune 100 company or a blogger who relies on revenue from your content to supplement your income, it’s important to think about what goes into your social media headcount.
Regardless of whether you have a team of 25 or are a team of one, these resources might include:
1) Time allocated to social media listening, community engagement, content creation, and customer service.
2) Listening and Engagement Tools like Hootsuite, Curata, Sprout Social, Brandwatch.
3) Creative Software to facilitate content creation like the Adobe Cloud suite, video editing software, etc…
4) Publishing and Scheduling tools like Tailwind for Pinterest, Buffer, or
5) Organic Content Analysis Tools like SEMRush, Moz, Ahrefs, or Screaming Frog.
6) Allocated Budget for Paid Media Advertising like Google AdWords and Facebook, Pinterest, Twitter, and YouTube ads.
7) Consulting Fees for professionals who can provide you analysis and guidance in a more efficient manner than doing it yourself or having your team do it.
How big your marketing or social media team is will define how many licenses, tools, and headcount you need to secure funding for. If you have a large team, you’ll need to account for licenses for the appropriate resources.
Social Media Community Managers need listening, publishing, and analysis tools. Creative Directors need access to the image and video editing software. SEO Analysts need access to analytics and evaluation tools to determine how your content is performing in the Search Engine Results Pages (SERPS)
The Reality Of Social Media Budget Planning
Unfortunately, the difference between how social media budget planning should go and how it usually goes are often worlds apart.Planning a social media or blogging budget can be tough, but if you are prepared, you can make a case for more resources! Click To Tweet
On the other end of the spectrum, individual bloggers are often hesitant to allocate some of their hard-earned monetized earnings toward ad spend or new social media tools. This is especially true when your blog is your primary source of income.
The reality, however, is that you have spend money to make money.
Building The Business Case For The Social Media Spend
No matter how big or small your organization is, you HAVE to take some time to think through the business case for each element of your social media budget.
Estimating Your Revenue Or Operational Expense (OpEx) Savings
The first thing you need to think through is your anticipated monthly revenue or savings in operational expenses.
For instance, if you are a solo blogger who earned ~$2000 per month from ad revenue and affiliate sales last year, think through what changes you could make to increase that to ~$2,500 per month in the coming year.
Some changes might include:
- Increasing your content publication rate – More content usually means more money.
- Optimizing older articles – Find those articles that aren’t earning up to their potential and re-write or enhance them
- Promoting articles via social media advertising – While the ads usually can’t generate enough traffic to pay for themselves, they can pay for themselves by increasing your email subscription rates or sales of eBooks or affiliate sales.
- Increasing the volume of content promotion or adding new channels – If you aren’t taking advantage of a channel or have opportunities to increase your engagement, maybe an assistant could help with that.
If, on the other hand, you are a company using social media to engage with your community or provide customer service, you might have to think beyond just sales to determine where your value in social media can be found.
Some opportunities might include:
- Increasing your number of sales leads or conversions generated – More sales or leads usually means more revenue. If more resources will help you drive sales or leads, make the case.
- Reducing your cost-per-sale or cost-per-lead – Sometimes the value in a new tool or resources is the fact that you can find new lead pools or generate sales for less money expended. Find ways to justify how your tool will drive your operational expenses down.
- Decreasing customer support costs – If you can help a customer resolve an issue through a Twitter conversation, it might cost your company a lot less than if that customer called a phone support center. If that customer was at-risk for abandoning your product, those tweets might also help you demonstrate a “saved customer”. The key to making the business justification for customer support via social media is to clearly demonstrate how it can retain customers and reduce operational costs.
Estimating The Increased Costs
Once you have identified where you can increase revenue or decrease operational spend, the next step is to identify the tools or resources that can help you accomplish those goals.
For the blogger who wants to increase your ad revenue by ~$500/month. Find tools that can help you create content more quickly. Do you need to hire a content writer? If you paid a writer ~$150/month for 3 new articles would that free up your time to promote content on a new social media channel?
Sure, you’d be spending $150 each month to get the content, but would those articles bring in another 10,000 sessions each month to your site? If your ad RPM is $20 then those articles would generate $200 in additional revenue. That’s a $50/month net profit toward your $500/month.
See? Spending money effectively can provide a positive return.
For companies with social media teams, you need understand and explain how the increased cost of the proposed tool or new headcount would either reduce your operational expense or increase sales. For instance, would a social listening tool like Brandwatch help you better identify customer support issues and create content that would reduce costs to your call center?
Imagine if you allocated a portion of a headcount to working directly with your customer service call centers to determine where the highest call volumes were and create online content that reduced the volume of those calls.
As an example, I worked with a company whose highest volume of calls came in the form of customers needing their passwords reset. Why? Because there were no instructions published online to help the customers reset their passwords themselves.
Taking the time to analyze the problem, create and publish the content (in text and video format) not only reduced the password reset calls by 70% but it allowed the company to re-allocate one of their customer service call center reps to helping serve inbound sales calls.
This meant the call center rep was no longer tied to a cost center (customer support) but now was re-allocated to a revenue center (sales).
The key, here, is to ensure that you are able to clearly demonstrate how your increase social media budget will either increase revenue or decrease operational expense.
Remember…without justification, it will be tough to secure the funding.
Telling A Realistic Budget Story
The final important aspect to allocating more resources is to be able to convince yourself or others that the juice is worth the squeeze. In other words, you will get paid back on your investment.The key to a successful social media budget request is telling a story that explains why the juice is worth the squeeze! Click To Tweet
Whether it’s explaining to your spouse that you’re going to invest some of your earnings back into your blog or convincing your boss that you need additional headcount or tools, you HAVE to be able to tell a convincing story to explain the need.
To do this, be prepared with the following:
- A Clear Explanation Of The Challenge – If you don’t have enough time or resources to be able to accomplish the tasks, explain why that is limiting you or your company.
- A Solution That Will Address The Challenge – What tool or change in process will help solve the problem? How much will it cost?
- A Use Case – Explain the story of how applying the solution will address the challenge. Be prepared to explain how the investment will pay for itself in new revenue or reduced operational expense.
Look, annual budget planning is not easy. There are still quite a few social media ostriches out there who think that social media is a trend or a fad that will pass. The harder you work at putting together your business case and being ready to tell your story, the more success you will have securing the funding you need.
Have suggestions for other elements to consider when creating your annual social media budget? Leave a comment and let me know if I’ve left something out.